Heaven's Gate is notorious as the film that forced United Artists into bankruptcy. And, 25 years after its catastrophic first release, it's still not clear whether Michael Cimino's movie is a misunderstood masterpiece or Hollywood's ultimate folie de grandeur . Restored by MGM, and screening this week at the National Film Theatre in London, it certainly looks incredible: if you like images of snow-capped Wyoming mountains or huge trains crossing the prairies, belching black smoke into icy air as they go, you'll find plenty to savour here. And yet, for all its beauty, Heaven's Gate is still an object of contempt.

When MGM released the restored three-and-a-half-hour cut in the US late last year, old animosities were not long in rumbling to the surface. "This poor film has been cursed since the day it started shooting," says MGM's archivist John Kirk, the man in charge of the restoration. His attempts at putting the film back together were frustrated by lack of funds and the careless way in which the out-takes and large parts of the original negative have been discarded. Cimino shot more than 200 hours of footage, but most of this material is now almost certainly lost, thrown out in the early 1990s when MGM was seeking to save money on storage costs.

Cimino himself has had nothing to do with either the restoration or with a new documentary, Final Cut: the Making and Unmaking of Heaven's Gate, directed by Michael Epstein. Those close to Cimino believe he simply didn't want to "hold himself up to ridicule" a second time. And who can blame him? After all, when the film was first released in New York, he became a nationwide object of scorn. Vincent Canby's review in the New York Times set the tone: "Heaven's Gate fails so completely," he wrote, "that you might suspect Mr Cimino sold his soul to the Devil to obtain the success of The Deer Hunter, and the Devil has just come around to collect." Stung by the reviews, Cimino withdrew his film from circulation. He re-edited it, shortening it by 70 minutes, but it still did lousy business.

"The movie was never properly evaluated in America because of the press and their reaction to Michael Cimino," says Steven Bach. Head of United Artists at the time, Bach plays an ambivalent part in the Heaven's Gate story. He is its main chronicler; his well-received book, Final Cut, partly inspired Epstein's new documentary. And he believes the US press relished the chance to devour Cimino: "They found him arrogant, impossible and an egomaniac. They felt they had overpraised The Deer Hunter and they were lying in wait."

None the less, Bach gives short shrift to the idea that Heaven's Gate is one of the greatest movies in recent Hollywood history. "If it's such a masterpiece," he asks, "why doesn't anybody go?" It is also apparent that Bach hasn't forgiven Cimino for the indignities the director made him suffer during the making of Heaven's Gate. The memory of the fateful day when the director finally consented to show him his masterwork still rankles. Watching the five-hour cut of the film, on which Bach's career and the survival of the studio depended, was, he says, "like sinking into the abyss. Every minute and hour that it went by got worse. It was clear that all of the hopes we had that Michael was making Dr Zhivago or Lawrence of Arabia or Gone With the Wind were gone. The movie he had talked about for two-and-a-half years was not in that footage."

Largely thanks to Cimino, Bach's stint as a studio boss was short-lived. In the late-1970s, Hollywood was full of film-makers whose movies at UA had been cancelled because Bach had committed all the available money to Heaven's Gate. He speaks darkly about walking into Hollywood restaurants and feeling "the room go quiet, as if a dead man had just walked in".

Bach admits he had very mixed feelings when he read the reviews: "I didn't want that to happen to Michael. I thought it was unjust," he says. He pauses. "But was there an element of schadenfreude? Absolutely. I wanted to say to him, 'See! I told you it was too long!'"

Now Heaven's Gate is facing a drubbing all over again. Bingham Ray, the studio executive who commissioned the restoration, was ousted from MGM/UA not long after he gave the green light to Kirk. The original idea was that the newly minted Heaven's Gate would be released in tandem with Epstein's documentary and that both would be issued on a special edition DVD. Post-Ray, MGM's enthusiasm for the project rapidly cooled and Kirk's budget shrank. When MGM re-released the film in the US it was with the minimum of fanfare. Predictably, it did minimal business.

MGM is also charging Epstein such exorbitant rates for using Heaven's Gate clips that he can't afford to license them - so he can't show his documentary outside the festival circuit.

Perhaps, Epstein suggests, Cimino's real problem was simply his nationality. "Had Heaven's Gate been directed by Bertolucci or Visconti, it would have been hailed as a masterpiece. Cimino's misfortune was to have been in America rather than in Europe."

· The restored version of Heaven's Gate is at the National Film Theatre, London SE1, on Sunday. Box office: 020-7928 3232.